BRUSSELS: Italy’s Prime Minister defended the country’s “beautiful” 2019 budget on Thursday, brushing off criticism of it from Brussels as European authorities stepped up pressure for changes to a draft that breaches the bloc’s fiscal rules.
Giuseppe Conte also denied a rift over the fiscal plan within his governing coalition, after reports of a spat over tax revenues.
Italy’s draft budget is serious breach of EU rules: Commission
The draft, signed off by Italy’s cabinet on Monday, will hike the deficit at a time when under EU regulations it should be falling, as well as boosting welfare spending and cutting the retirement age.
In the first formal step of a procedure that could lead to Brussels rejecting the budget and to fines against Italy, the European Commission will send Rome a warning letter. An EU official said it was expected be to delivered on Thursday.
European Commission President Jean Claude Juncker said Italy had used up all the fiscal flexibility available under EU rules, and that Brussels would examine the draft without prejudice.
Conte said he was not worried by the letter, and that he expected the Commission to send others to Spain, France and Portugal.
Prior to news of the letter, he told reporters: “I’m aware this is not the budget the Commission expected. I expect critical observations. We will discuss and we will reply to these considerations.”
He described the budget as “beautiful”, having said on Wednesday – the first day of a two-day EU summit – that he saw no room for changing tack on it.
If it is not amended, the Commission could reject the draft by Oct. 29 in what would be an unprecedented move that could further rattle markets..
Austrian Chancellor Sebastian Kurz said fiscal rules should be respected by all, adding: “Too much debt is dangerous.”
Dutch Prime Minister Mark Rutte said on Twitter he had expressed concerns over the budget plans in a meeting with Conte on Thursday. He added that the Commission had Netherlands’ full support in making sure EU fiscal rules were respected.
In what could be a source of concern at home, Deputy Prime Minister Luigi Di Maio, leader of the 5-Star party, said on Wednesday a legislative text on a partial tax amnesty had been “manipulated” before its final approval, raising doubts about the stability of Italy’s coalition government and about the revenues for its budget.
The anti-establishment 5-Star has always opposed amnesties – a frequently used policy in Italy where people or companies can avoid being pursued for tax dodging by paying a fee. Its coalition partner, the far-right League, favors amnesties, which bring money into the treasury and are popular with voters.
Di Maio did not clarify who could have amended the document.
Asked by reporters about a possible coalition rift, Conte – who is not from any political party – replied: “There is no division”. He added he would work on the legislative text after returning to Rome on Friday.